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Leerink is boosting its price target on Outperform-rated Exelixis (Nasdaq: EXEL) from $15 to $16 after Exelixis announced detailed results from the CABOSUN randomized phase 2 trial of cabozantinib in patients with previously untreated advanced renal cell carcinoma (RCC) with intermediate- or poor-risk disease per the International Metastatic Renal Cell Carcinoma Database Consortium (IMDC) on Monday.

The firm commented, Overall, the data looks very impressive and was highlighted as a "major scientific breakthrough" and EXEL plans to file an sNDA with the FDA in the near future to obtain a label for front-line treatment of intermediate- and poor-risk mRCC. The stock traded down, however, following comments by the ESMO presentation discussant noting that a Phase III trial may be needed to confirm the overall survival (OS) trend seen in the study. Based on feedback we received previously form several KOLs, we believe the approval probability of the sNDA is high, in particular in the context of already generated positive Phase III results in 2L, with compendia listing expected. Several key questions around the data were addressed by mgmt. in a post-ESMO investor briefing, highlighting the robustness of the results. We are increasing our PT to $16 (from $15) to account for a higher probability-of-success of Cabo in 1L RCC and we reiterate our OP rating given that Cabometyx is in our view very well positioned to capture significant market share in the treatment of RCC, while Street expectations for Cotellic, EXEL's MEK inhibitor that is partnered with Roche, are low and could drive significant additional value, e.g., in colorectal cancer or in melanoma, where a new Phase III IO combination trial, the "TRILOGY" study, is expected to initiate within the next few weeks. Potential label extension opportunities for Cabo -- e.g., in liver cancer (HCC) where a Phase III trial is ongoing, or in bladder cancer -- could drive additional upside not yet reflected in the stock.

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